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| ▲ | toomuchtodo a day ago | parent [-] | | Indeed, imports are for filling their ~1.3B barrel strategic reserve at favorable sanctioned priced imports. https://www.reuters.com/business/energy/china-targets-steady... https://en.wikipedia.org/wiki/Strategic_petroleum_reserve_(C... | | |
| ▲ | JumpCrisscross a day ago | parent [-] | | > Indeed, for filling their ~1.3B barrel strategic reserve That's 117 days, or four months, of imports [1]. Half of Hormuz-transiting oil ends up in China [2]. So even if China fully substitutes lost imports with reserves, that's not even taking them through the end of the year. (And China running down its reserves is a strategic win for America. It means they aren't available to buffer a blockade of the Straits of Malacca.) I don't even know of a credible economist in China arguing China is insulated from this shock. [1] https://www.eia.gov/todayinenergy/detail.php?id=64544#:~:tex... [2] https://www.visualcapitalist.com/charted-oil-trade-through-t... | | |
| ▲ | maxglute a day ago | parent | next [-] | | PRC coal to petchem is like 3mbd equivalent (growing at 500k mbd per year), profitable vs oil at $80, ergo about 3/5 of their industrial feedstock inputs just got massive 50% and growing discount vs everyone else. Plastics, synthetics, fertilizer... everything PRC now has structural 50% discount. For actual Hormuz, PRC gets 6/12mbd. They really only need ~8m for domestic use, other 4m is discretionary, i.e. reselling refined petro/petchem or heating, stuff which can be forgone without degrading domestic operations or rapidly electrified. So really PRC only dealing with 2mbd import shortfall if Hormuz fully closed, their SPR will stretch for couple years at current runway if they just forgo discretionary oil use, and by the time it empties, if PRC goes ham on domestic EV / freight at current adoption, with active coal to X in pipeline, they can displace another that 2m barrels. Only way for PRC SPR to run dry end of year is if US starts blockading Malacca tomorrow and glass pipelines. Otherwise PRC on trend to survive with massive advantage vs everyone else. Energy geopolitics to consider is unless Hormuz shuts down completely by Iran (or US), PRC gets first dibs on energy products by default, all existing contracts are going to be force majeured, and only way any GCC producer is going to make money is by selling to PRC first if Iran serious and can enforce petro-yuan. Also with 20% energy mix from oil vs 40% from US, and electric freight options for logistics, PRC simply better setup to weather high energy prices and disruptions. Their coal petchem stack = they are now permanently cheaper than all other (oil/naphtha based) industrial competitors who bluntly can't even pull the overproduction card vs PRC because their production will crater from lack of of inputs creating condition to reinforce PRC as primary global producer. No one can outproduce PRC in high oil scenario because no one has PRC price stable coal to liquid/chemical stack that serves as energy fortress that decouples most of PRC economy/industry from oil prices. TLDR, PRC is relatively derisked from Hormuz already, if US wants to actually snowball oil disruption into advantage vs PRC, they need to start war with PRC right now. Otherwise sustained high oil price going to be net positive for PRC vs basically everyone else. | | |
| ▲ | JumpCrisscross a day ago | parent [-] | | > if they just forgo discretionary oil use You're describing economic damage. > which can be forgone without degrading domestic operations or rapidly electrified I've heard this line from geopolitical analysts, mostly outside China. And then I hear from economists and traders in China, or look at its stock market [1], and see them preparing for a shock. A shock that's been softened by Beijing's policies. But not eliminated. > unless Hormuz shuts down completely by Iran (or US), PRC gets first dibs on energy products by default This is far from certain. Right now, Iran has a veto on Hormuz traffic and is throttling it, including for China-bound traffic. Long term, I think we realise every Hormuz neighbour has an off switch. Why a waning customer would get "first dibs...by default" will require more explanation from you. > sustained high oil price going to be net positive for PRC vs basically everyone else I'm not seeing it. Inputs going up in price is still worse than not. Russia is winning. Non-Gulf oil exporters are winning. And China is relatively winning within Asia. But globally, it's still weaning a risk that's been known for decades. [1] https://tradingeconomics.com/china/stock-market | | |
| ▲ | maxglute a day ago | parent [-] | | >economic damage Shutting down on subsectors of petchem with i.e. forgoing $30-80 margin per barrel of refined crude, around 1-2mbd, which is... not nothing but fraction vs US cost to sustain war to deny those barrels - think ~50b per year isolated to discretionary SOE petchem vs 200b war supplemental. The important point is they don't have to actually sacrifice barrels for broader industry with petchem inputs. A few energy SOEs twiddling thumbs is completely different level of exposure vs others who may have to shut down production lines due to lack of oil/petchem where each barrel translates to significantly higher margins on intermediary/finished goods. Those are not discretionary. >But not eliminated Of course not eliminated, there will be adjustment pains/friction to unprecedented changes, but PRC stock market has always been dud performer/casino (despite gov attempts to reform) and not indicative of actual industrial performance. >Why a waning customer Because PRC is not going to be waning customer. PRC wants no oil dependance for itself =/= PRC stop buying oil. Reminder PRC is the worlds largest oil refiner by capacity, bigger than US. As PRC electrifies and oil demand diminishes, they are not going to let those expensive assets deprecate when they could be value producing. PRC will continue to buy massive amounts of oil to sell refined oil products to others, i.e. pocket that 50b+ per year which could be 250b per year if domestic oil is displaced and refineries only need to export. What PRC wants post domestic oil, is to continue importing massive amounts of crude so world will import massive amount of surplus petro products from PRC... That's partly why PRC SPR is so big, that 1.4b in peacetime was used to influence global oil prices by manipulating supply... but if Iran is handing PRC petro-yuan on platter then that is even better control. GCC petro states are not going to shut off their exports that literally funds everything, they need export proceeds to survive, and if PRC via Iran has chokehold on what oil goes out, then they going to prioritize selling to PRC. This not even considering they need PRC goods/intermediate goods to survive. >Inputs going up in price is still worse than not. Inputs going up for EVERYONE ELSE disproportionately is better than not, because this is massive net relative advantage for PRC. CTO barrels subsidizing 2/3 of industrial (~5mbd) with 50% inputs than everyone else is insane competitive advantage. Sure, none GCC producers are winning the resource export game. High oils prices which PRC industry is insulated from = PRC is going to STOMP other industrial producers and win in manufacturing export game (even harder). If PRC plays along with Iran petro-yuan / tollbooth game, who knows they can even scale up discounted crude to refined export complex, i.e. they will also parasitically win the resource export game being reseller. PRC scraping extra margins off below benchmark price which others will have to pay (assuming they're even allowed) is MUCH stronger position than PRC original plan to have legacy refinery operate off benchmark price. This part key, arbitrating Iranian petro-yuan / gating export access = higher oil prices for everyone else = PRC coal to petchem AND crude to petchem are BOTH going to profit disproportionately. This doesn't mean PRC doesn't also pay high prices, but others simply paying highER creates market clearing conditions that will liquidate competitors who are structurally uncompetitive paying benchmark. | | |
| ▲ | JumpCrisscross a day ago | parent [-] | | > few energy SOEs twiddling thumbs is completely different level of exposure vs others who may have to shut down production lines Sure. Again, I'm not saying China isn't better off than anyone else in Asia. But "few energy SOEs twiddling thumbs" is economic damage. Enough to have spooked traders and policymakers in China. > Reminder PRC is the worlds largest oil refiner by capacity Good point. Conceded. > Inputs going up for EVERYONE ELSE disproportionately is better than not, because this is massive net relative advantage for PRC Again, in Asia. Yes. Globally, they're still facing a slowdown in growth. Emerging stronger after a recession doesn't make a recession fun (or risk free). Like, take away direct war costs and it's genuinely ambiguous how an oil shock hits the U.S. market right now. We have enough production, and enough refining with enough of a global crack spread, that the hits to consumption almost even out. Almost. Still hurts. But not as much as before. (And, granted, not as much as China has been able to mitigate downside.) | | |
| ▲ | maxglute 18 hours ago | parent [-] | | Relative/strategic win like emptying SPR might be win for US, but US being stuck in middle east quagmire spilling disproportionate treasure is bigger net win for PRC. PRC suffering 50B in refined re-export is not same as 200B floor war and high oil prices for 40% of CONUS energy mix, i.e. cut off nose to spite territory. > doesn't make a recession fun (or risk free). This true, but being structurally advantaged as producer in global recession does position PRC and set them up to weather or even avoid/win. Delta of PRC energy/industrial input price potentially dropped below USD tariff levels to other countries designed to divert away trade from PRC. What if global recession = disproportional trade directs back to PRC at expense of other producers and accelerates PRC gains in strategic export sectors, again at expense of everyone, especially, G7 producers, not just Asian. PRC pivoting high quality growth = murdering real estate with 3RL shaved 2-3% of dirty growth while redirecting trillions in real industry. PRC can strategically self inflict worst growth for gamble of moving up value chain to high end, that was pain and risk. Chronic high oil = most likely pain of less global demand, but chance of increased PRC specific demand especially in sectors PRC took pain and risked to develop. It can emerge stronger DURING global recession especially with PRC also have leverage over renewables / cheap energy stack. > hits the U.S. market This I won't pretend to know, but on paper US has/or can coerce unlimited supply, so really matter of controlling prices which does mean arm twisting US oil majors... that seems unlikely under current admin, but it is on paper possible. Like it's mildly amusing that VZ adventure could massively stabilize US energy prices if oil remained under VZ/PDVSA control which politically enables US to coerced cheap barrels. But handing it over to Chevron = US no pays benchmark price to US companies with lobbies instead of discount price. But on paper, USD can weather crisis better than most, via political instruments / levers that Trump has power to pull but also levers Trump specifically doesn't seem likely to pull. |
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| ▲ | toomuchtodo a day ago | parent | prev [-] | | China’s Edge in an Oil Shock: Electric Cars and Renewables - https://www.nytimes.com/2026/03/14/business/china-oil-cars.h... | https://archive.today/UBP8L - March 16th, 2026 Implications of the Conflict in the Middle East for China’s Energy Security - https://www.energypolicy.columbia.edu/implications-of-the-co... - March 4th, 2026 Ember Energy: China - https://ember-energy.org/countries-and-regions/china/ - February 2026 China’s LNG imports were dropping before this crisis. China’s LNG imports fell 12% in 2025 despite remaining world’s top buyer - https://www.icis.com/explore/resources/news/2025/12/30/11168... - December 30th, 2025 (I agree there will be some pain, but argue that China has sufficiently prepared for a fossil supply chain disruption of this magnitude, while also having the industrial state capacity to achieve a more favorable long term trajectory; they are deploying ~400GW+ of renewables annually at current deployment rates) | | |
| ▲ | JumpCrisscross a day ago | parent [-] | | > argue that China has sufficiently prepared for a fossil supply chain disruption of this magnitude Where we agree is in China having massively reduced the impact of this shock. (And, probably, in them succeeding in insulating themselves completely within a generation.) Where we don't is in this still being a stagflationary hit to China and, probably, a worse economic hit to them than it will be to us. Put more succinctly, the first and second derivatives are massively favourable. But the actual level still produces lots of vulnerability. China will be better off than its neighbours. But it's still going to get screwed even if the war ends tomorrow, which it isn't. |
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